Third-quarter figures reaffirm higher earnings forecast
BayWa AG is on track to achieve its highest earnings yet in its nearly 100 years of existence as a company. In the third quarter, BayWa increased its revenues to €14.3 billion (Q1–3/2020: €12.2 billion). Earnings before interest and tax (EBIT) jumped by around 87% to €191.7 million (Q1–3/2020: €102.7 million). Business was highly successful, particularly in the Renewable Energies business unit and in the Agriculture and Building Materials Segments.
“We succeeded in taking advantage of the largely favourable market environment while also deflecting the disruptions in global supply chains, thanks to our strategy and positioning,” says Prof. Klaus Josef Lutz, Chief Executive Officer of BayWa AG. Lutz expects numerous planned project sales in the Renewable Energies business unit and the continuation of dynamic development in the Agriculture and Building Materials Segments to act as the primary sources of sufficient tailwind for a year-end rally. “We are currently reaping the benefits of what we have been sowing since 2008: our strategy of internationalising agricultural trade, investing in renewable energies and, most recently, restructuring our agricultural business in northern and eastern Germany – all that is now paying off.”
Flourishing trade in photovoltaic (PV) components was the main factor behind another strong quarter in the Energy Segment, making it possible to more than compensate for the anticipated decline in business in the Conventional Energy business unit. High prices and increased volatility on international grain exchanges bolstered Cefetra Group’s trade activities. The business unit’s German agricultural trade activities also took advantage of the rise in agricultural commodity prices. In the first three quarters, the Agricultural Equipment business unit slightly outperformed the same period in the previous year, which also saw strong performance. Although the weather-related obstacles and the problems caused by the coronavirus pandemic continued to have an impact on international fruit trading, BayWa Global Produce GmbH still expects the annual result to match the level achieved in 2020. Thanks to higher trade margins and a nearly unencumbered ability to deliver goods and services, earnings in the Building Materials Segment once again increased significantly. BayWa expects a substantial rise in operating earnings for 2021, provided the weather continues to be seasonal in the remaining weeks of the year.
The Energy Segment recorded revenues of €3.7 billion after the first nine months of the current financial year (Q1–3/2020: €2.7 billion). EBIT stood at €80.1 million (Q1–3/2020: €48.0 million). With a 72% increase in total output year on year, PV module trading was thoroughly successful in the third quarter. CO2-optimised energy carriers saw gains in the Conventional Energy business unit as well, with the BayWa subsidiary BayWa Mobility Solutions GmbH adding two further locations to its network of liquefied natural gas (LNG) stations and sales of wood pellets increasing by 31% to stand at roughly 566,200 tonnes. By contrast, sales of fuel and heating oil fell.
Revenues in the Agriculture Segment amounted to €9.0 billion at the end of the third quarter (Q1–3/2020: €8.1 billion). EBIT came to €111.4 million (Q1–3/2020: €77.5 million). In commodities trading, the Cefetra Group business unit benefited from high demand coupled with low grain availability. Specialities trading was also very successful, particularly with starch products and plant-based proteins. In Germany, BayWa benefited from a variety of factors, including poorer grain quality in France, and successfully closed gaps in its export network by forging connections with regions such as Saudi Arabia and northern Africa. BayWa Agrarhandel GmbH, which has managed the Group’s agricultural trade activities in northern and eastern Germany since 1 January 2021, recorded a roughly 20,000-tonne increase year on year in the volume of goods processed through block train logistics and Baltic Sea ports despite having fewer local grain warehouses. The Agri Trade & Service business unit has good sales prospects in the months to come as well. However, due to the very high prices at the present time and the decision by some manufacturers to scale back their production activities, the further development of fertilizer sales remains uncertain following a strong season. In Agricultural Equipment, which benefited from high demand for used machinery and for servicing and workshop services, BayWa reports full order books for new machinery. With producers currently facing a shortage of chips, the extent to which the orders can be fully processed this year depends on the ability of the manufacturers to make deliveries. A lack of containers, high freight costs and a shortage of seasonal workers had a negative impact on earnings for the Global Produce business unit. BayWa expects the marketing of the German apple harvest and an increase in demand for exotic fruits during the Christmas season to have a positive effect on operating earnings for the year. Furthermore, the business unit anticipates extraordinary income from the sale of a location in New Zealand.
Building Materials Segment
The Building Materials Segment recorded revenues of €1.6 billion in the reporting period (Q1–3/2020: €1.4 billion). EBIT stood at €61.4 million (Q1–3/2020: €39.2 million). The segment benefited from continued good capacity utilisation in the German construction industry and recorded sales growth across its entire product range, with building construction and roofing products proving particularly strong. Thanks to good inventory management, as well as an established and stable network of suppliers, BayWa was able to deliver products with few restrictions and successfully generated higher trade margins. BayWa Bau Projekt GmbH, which is active in residential property development through alliances with regional construction companies, was able to build on the positive trend from the first half of the year by selling the remaining units in a construction project with semi-detached houses south of Munich, among other things. Further proceeds from a residential and office park in Schrobenhausen are expected by the end of the year.
An overview of the key figures on the business development of the BayWa Group as at the third quarter of 2021 can be downloaded as a PDF at the bottom of this page: